8.  The applicant companies, Shesti Mai Engineering OOD, Motorengineering OOD, Nov Bryag OOD and Vitex AD, are based in Sofia, Varna, Burgas and Gabrovo respectively. The other applicants, Mr Krasimir Kostov Evtimov, Mr Georgi Ferdinandov Mitev, Ms Kalina Nikolova Stoycheva, Mr Stefan Borisov Stefanov, Ms Lilyana Nikolova Galeva, Ms Neli Mitkova Alexandrova, Ms Nikolina Slaveva Amzina and Mr Ivan Boyanov Bozhilov, were born in 1946, 1955, 1953, 1956, 1945, 1960, 1947 and 1960 respectively and live in Sofia.
9.  At the material time all applicants were shareholders in Mezhdunaroden Tzentar po Firmeno Upravlenie AD (“Международен център по фирмено управление АД” – “MTFU”), a limited liability company active in the field of professional training. When it was formed in 1989, the company had a share capital of 3,000,000 old Bulgarian levs (“BGL”)[1], divided into three thousand shares of BGL 1,000 each. Three thousand new shares with a nominal value of BGL 1,000 each were authorised and issued in 1990, the company’s capital thus reaching BGL 6,000,000. In 1998 the nominal value of the shares was increased to BGL 10,000 each, the company’s share capital thus reaching BGL 60,000,000 (which became BGN 60,000 after the July 1999 currency revalorisation – see the footnote below).
10.  On 6 April 1990 MTFU entered into an agreement with the Ministry of Finance whereby it acquired the right to use for its professional training business, for a period of fifty years, a training centre consisting of buildings and adjoining land in the village of Bistritsa, close to Sofia. In consideration for the acquisition, MTFU, apart from agreeing to pay BGL 6,078,000 for the right of use (according to the applicants, at that time that sum was equal to the training centre’s fair market value), also undertook to carry out at its own expense reconstruction of and improvements to the premises. It was, however, stipulated that, should the right of use be terminated, the State would remain the owner of the whole property.
11.  By a decision of the Council of Ministers of 21 May 1990, the MTFU was formally granted the right of use of the training centre, under the terms laid down in the above‑mentioned agreement. Several months later the MTFU made the appropriate payment for the right of use.
12.  Between 1990 and 1999 MTFU carried out major renovation and reconstruction works, enlarging the existing buildings of the training centre, constructing new ones and developing the centre’s infrastructure.
13.  In 1997 MTFU’s revenue from its professional training business was 390,000 United States dollars (USD), and in 1998 it increased to USD 452,300. Its revenue for the first seven months of 1999 was USD 291,470. In July 1999 the company had one hundred and ten employees. Until that time, the applicant Mr Evtimov had served as its executive director.
14.  In July 1999 the applicants together held 49.83% of MTFU’s capital, or 2,990 shares in total. Their shareholdings broke down as follows:
(i)  Shesti Mai Engineering OOD – 250 shares;
(ii)  Motorengineering OOD – 50 shares;
(iii)  Nov Bryag OOD – 240 shares;
(iv)  Vitex AD – 50 shares;
(v)  Mr Krasimir Kostov Evtimov – 610 shares;
(vi)  Mr Georgi Ferdinandov Mitev – 600 shares;
(vii)  Ms Kalina Nikolova Stoycheva – 390 shares;
(viii)  Mr Stefan Borisov Stefanov – 200 shares;
(ix)  Ms Lilyana Nikolova Galeva – 100 shares;
(x)  Ms Neli Mitkova Alexandrova – 100 shares;
(xi)  Ms Nikolina Slaveva Amzina – 100 shares; and
(xii)  Mr Ivan Boyanov Bozhilov – 300 shares.
On an unspecified date after 2004 Mr Mitev transferred all his shares to Mr Evtimov.
15.  In the meantime, in 1992 MTFU went into liquidation. However, in 1995 a general meeting of its shareholders resolved to discontinue the winding‑up procedure. By decision no. 6 of 28 July 1995 the Sofia City Court entered that resolution in the register of companies. On 3 August 1996 a general meeting of MTFU’s shareholders adopted new articles of association, which provided that the company would be managed by a board of directors, instead of the managing and supervisory boards which had hitherto existed. However, the meeting did not elect members of the new board of directors.
16.  Between 20 and 22 July 1999 Mr B.S., acting on behalf of a company, Minstroy Holding AD (“Minstroy”), asked the Sofia City Court (Софийски градски съд) to enter in the register of companies Minstroy’s election as MTFU’s new managing director, as “resolved” by MTFU’s board of directors on 20 July 1999.
17.  On 21 July 1999 Judge R.P. of the company division of the Sofia City Court, acting on her own initiative and sitting in private, issued decision no. 9 concerning MTFU. Referring to Article 192 § 2 of the Code of Civil Procedure (see paragraph 53 below) and noting that decision no. 6 of 28 July 1995 (see paragraph 15 above) had not specified who the members of the board of directors of MTFU were, she stated:
“Undoubtedly, that was an obvious error. ... It should be corrected by rectifying decision no. 6 ... and entering a board of directors [in the register].”
Accordingly, the judge entered the names of five members of a new board of directors into the register of companies. All of them, save for Mr Evtimov, were legal persons.
18.  The next day, 22 July 1999, Judge R.P. issued decision no. 10. Citing a “resolution” of the newly registered board of directors of 20 July 1999 (see paragraph 16 above), she erased Mr Evtimov as executive director of MTFU, and registered in his place Minstroy, represented by Mr B.S.
19.  On 26 July 1999 Mr B.S. and other representatives of Minstroy took control of MTFU’s premises and evicted its erstwhile management, including Mr Evtimov, by force. On 27 July 1999 Mr B.S., in his capacity as representative of the new managing director, issued an order barring Mr Evtimov from entering the company’s premises.
20.  The new management called and conducted two general meetings of MTFU’s shareholders, which took place on 30 September and 15 November 1999. The applicants, as well as some other shareholders, were denied access to those meetings. As a result, they were attended by shareholders representing only 8% of MTFU’s capital. The meetings elected new members of MTFU’s board of directors and a new executive director. The general meeting of 30 September 1999 also resolved that the executive director would “cancel all existing shares and share warrants and issue a new share register and new share warrants”. The applicants submitted that their names were left out of the share register of MTFU drawn up pursuant to that resolution.
21.  In view of an interim injunction issued by the Sofia District Court (Софийски районен съд) (see paragraph 25 below), on 30 September 1999 the Sofia City Court postponed the registration of the resolutions taken at the first general meeting. After the injunction was set aside (see paragraph 26 below), on 29 November 1999 the Sofia City Court resumed the registration proceedings and by decisions nos. 11 and 12 of 29 November and 13 December 1999 entered the changes in the register of companies.
22.  On 15 November 1999 shareholders of MTFU representing 71.3% of the share capital of MTFU, who opposed the actions of the new management and who had been denied access to the general meetings called by that management, held a “parallel” general meeting. They passed a number of resolutions and elected a new board of directors. On 2 December 1999 the Sofia City Court refused to enter those particulars in the register of companies, noting that the meeting had not been called by the board of directors featuring in the register of companies, and that there was no evidence that it had been regularly conducted. It seems that an appeal by the applicants against that refusal was held to be inadmissible by the Sofia Court of Appeal (Софийски апелативен съд).
23.  Between July 1999 and May 2000 Mr Evtimov and other applicants lodged a number of complaints with the prosecuting authorities, the Ministers of Justice and Economics and other State authorities, asking them to take measures to protect the rights of MTFU’s shareholders.
24.  In September 1999 Shesti Mai Engineering OOD brought a claim against MTFU, represented by its new management, under Article 431 § 2 of the Code of Civil Procedure 1952 (“the Code”) (see paragraph 51 below). It sought to have decisions nos. 9 and 10 of 21 and 22 July 1999 (see paragraphs 17 and 18 above) set aside. It also sought, making reference to Article 498 of the Code (see paragraph 51 in fine below), to have the corresponding entries in the register of companies annulled. It argued that the decisions were null and void because (i) in 1995 there had been no resolution of MTFU’s shareholders to elect a new board of directors and (ii) such a body had only been envisaged for the first time in MTFU’s new articles of association, adopted in 1996 (see paragraph 15 above). There had therefore been no grounds to correct errors in decision no. 6 of 28 July 1995. Furthermore, the Sofia City Court had accepted that MTFU’s new board of directors had validly elected a managing director on 20 July 1999, a day before that board had been entered in the register of companies and had thus acquired capacity to act. Lastly, the Sofia City Court had disregarded the requirements of Article 192 § 2 of the Code (see paragraph 53 below) because it had acted on its own initiative and had not held a hearing.
25.  At the request of Shesti Mai Engineering OOD, on 21 September 1999 the Sofia District Court, finding that there was a risk that the rights which the company might acquire under a future judgment could be frustrated, granted an interim injunction. It suspended the enforcement of decisions nos. 9 and 10 of the Sofia City Court, barred the new board of directors and executive director of MTFU from taking any managerial decisions and from disposing of company assets, and ordered that the general meeting of MTFU’s shareholders scheduled for 30 September 1999 (see paragraph 20 above) be postponed.
26.  On appeal by one of the members of MTFU’s new management, the Sofia City Court set aside the injunction in a final decision of 3 November 1999. It held that there was no genuine risk that the enforcement of any future judgment would be frustrated, because, if Shesti Mai Engineering OOD’s claim was allowed and decisions nos. 9 and 10 were annulled, that development could be entered in the register of companies. It also held that it was impossible to suspend the enforcement of decisions nos. 9 and 10, because they had already led to changes in the register of companies. It went on to say that by barring MTFU’s new board of directors and executive director from taking managerial decisions and disposing of company assets, the injunction had in effect rendered nugatory decisions nos. 9 and 10 and the changes which they had brought about in MTFU’s registration details, which was inacceptable in interim proceedings. Lastly, the court held that it was not appropriate to prevent a general meeting of shareholders from taking place in connection with a claim for the annulment of pre‑existing entries in the register of companies. Shesti Mai Engineering OOD tried to challenge that decision, but on 15 October 1999 the Sofia Court of Appeal declared its appeal inadmissible.
27.  On 21 June 2000 the Sofia City Court allowed Shesti Mai Engineering OOD’s claims under Articles 431 § 2 and 498 of the Code. On 10 July 2002 and 3 November 2003 respectively its judgment was upheld by the Sofia Court of Appeal and the Supreme Court of Cassation (Върховен касационен съд). The courts were satisfied that the company had standing to bring the claims, because it had shown that it was a shareholder in MTFU on the basis of its share warrants and MTFU’s share register. In particular, the Sofia Court of Appeal found that “those pieces of evidence are unequivocal – they show that the claimant company has acquired and is holding shares in the defendant company”.
28.  The courts went on to find that the failure in 1995 to enter a board of directors of MTFU in the register could not have been regarded as an obvious error. The Sofia City Court held:
“Under Article 192 § 2 of the [Code], the court is only competent, on its own initiative or pursuant to a request by the parties, to correct an obvious error in its judgment ... It follows that the court is not competent to enter new circumstances [in the register].”
Therefore, Judge R.P. had not been authorised to act on her own initiative in order to make the entries that she had made on 21 July 1999, and decision no. 9 that she had issued was invalid. In relation to that, the Supreme Court of Cassation held:
“An entry in the register of companies which has not been made at the request of a person authorised by law to make such a request should be regarded as inadmissible.”
29.  Accordingly, the courts, by reference to Article 498 of the Code (see paragraph 51 in fine below), annulled the entries in the register of companies made with respect to decision no. 9.
30.  The courts made no rulings in relation to decision no. 10. Shesti Mai Engineering OOD did not seek to have their judgments supplemented in that regard.
31.  On 28 July 1999 Mr Evtimov also brought a claim against MTFU, represented by its new management, under Article 431 § 2 of the Code and section 71 of the Commerce Act (see paragraphs 51 and 56 below), seeking a declaration that decisions nos. 9 and 10 were null and void. He further sought, under Article 498 of the Code (see paragraph 51 in fine below), to have the entries in the register of companies made pursuant to those decisions annulled. His arguments were similar to those raised by Shesti Mai Engineering OOD (see paragraph 24 above).
32.  On 4 February 2000 the Sofia City Court stayed the proceedings, citing the opening of criminal proceedings for abuse of office against Mr Evtimov in his former capacity of executive director of MTFU. On 10 February 2000 Mr Evtimov appealed against the stay, arguing that the matters cited by the Sofia City Court had no connection with his claim. On 24 March 2000 the Sofia Court of Appeal allowed the appeal and the proceedings were resumed.
33.  The Sofia City Court gave judgment on 4 December 2001. On 17 March 2003 and 9 March 2004 it was upheld, respectively, by the Sofia Court of Appeal and the Supreme Court of Cassation. Based on MTFU’s share register and share warrants presented by Mr Evtimov, the courts were satisfied that he was a shareholder in the company. They went on to hold, for reasons similar to those given in the proceedings brought by Shesti Mai Engineering OOD, that decision no. 9 had entered details in the register pertaining to actions which had not taken place. However, this time they considered it inadmissible to examine in the same proceedings an application under Article 498 of the Code, saying that such an application was, in principle, to be examined in non‑contentious proceedings.
34.  The courts made no ruling in relation to decision no. 10 and Mr Evtimov’s application under Article 498 in respect of it. He did not seek to have their judgments supplemented in that regard.
35.  In April 2000 the two applicant companies brought a claim under Article 431 § 2 of the Code, seeking the annulment of decisions nos. 9, 10, 11 and 12 of the Sofia City Court (see paragraphs 17, 18 and 21 above). They further sought, under Article 498 of the Code (see paragraph 51 in fine below), to have the corresponding entries in the register of companies annulled.
36.  On 20 June 2000 the proceedings were stayed pending the outcome of the proceedings brought by Shesti Mai Engineering OOD (see paragraphs 24‑30 above). Following a request by Motorengineering OOD and Vitex AD of 16 February 2006, they were resumed on 21 March 2006.
37.  On 12 May 2006 the Sofia City Court dismissed the claims. On appeal, on 5 October 2007 the Sofia Court of Appeal partly quashed the City Court’s judgment, and held that the applicant companies no longer had an interest in seeking the annulment of decision no. 9, because that decision and the corresponding entries in the register of companies had already been annulled in the proceedings brought by Shesti Mai Engineering OOD. It remitted the remainder of the case, concerning decisions nos. 10, 11 and 12, for re‑examination.
38.  On 29 October 2008 the Sofia City Court gave judgment, which the Sofia Court of Appeal upheld on 6 July 2009. The courts held that the annulment of decision no. 9 did not have retrospective effect and that the annulment of the entries in the register made pursuant to that decision had accordingly taken effect only after the judgment of 3 November 2003, which had concluded the proceedings brought by Shesti Mai Engineering OOD. Therefore, decisions nos. 10, 11 and 12, made before that annulment and based on the entry in the register made on 21 July 1999, were not invalid. It also noted that Motorengineering OOD and Vitex AD, in so far as they alleged that the general meetings of the shareholders whose resolutions had been registered with decisions nos. 11 and 12 had not been duly convened and conducted, could have challenged those resolutions under section 74 of the Commerce Act 1991 (see paragraph 56 below), but had failed to do so within the applicable time‑limits. Accordingly, their claims were dismissed.
39.  It is unclear whether Motorengineering OOD and Vitex AD sought permission to appeal on points of law to the Supreme Court of Cassation.
40.  Following a number of complaints made by Mr Evtimov, in the beginning of 2000 the Inspectorate of the Ministry of Justice reviewed Judge R.P.’s actions in relation to decision no. 9 (see paragraph 17 above) and concluded that she had breached the relevant rules of procedure in many respects. On the basis of these conclusions, on 22 May 2000 the Minister of Justice proposed to the Supreme Judicial Council (Висш съдебен съвет) that disciplinary proceedings against the judge be opened. This was done, and in a decision of 6 October 2000 the Council’s disciplinary panel gave Judge R.P. a disciplinary warning. It found that in issuing decision no. 9 she had impermissibly acted on her own initiative and not pursuant to a request by the company, had committed a number of procedural violations, and had distorted the evidence in the case file and made perverse findings of fact. Her actions, which had been deliberate and not due to a mere lack of professional experience, had amounted to a breach of her professional obligations. In the panel’s view, Judge R.P. had “in fact created” a new board of directors of MTFU. However, as she had not committed other violations and had not “sought to prejudice the interests of third parties”, there were grounds to impose the most lenient disciplinary punishment – a reprimand.
41.  On 12 May 2000 the Council of Ministers revoked its decision of 21 May 1990 whereby it had granted to MTFU the right of use of the training centre in Bistritsa (see paragraph 11 above). The new decision was based on paragraph 6 of the transitional and concluding provisions of the State Property Act 1996, which limited the duration of existing contracts concerning the right of use of State property to ten years (see paragraph 59 below). The Council of Ministers also decided that MTFU would be reimbursed the respective part of the consideration that it had paid in 1990 (see paragraphs 10 and 11 above).
42.  On 8 June 2000 the regional governor of Sofia ordered MTFU to vacate the property. However, following a Constitutional Court decision whereby paragraph 6 of the transitional and concluding provisions of the State Property Act 1996 was found to contradict the Constitution (see paragraph 60 below), on 10 April 2001 the governor revoked his order.
43.  In 2007 MTFU brought an application for judicial review, seeking to have the Council of Ministers’ decision of 12 May 2000 declared null and void, on the grounds that it had been issued on the basis of a legal provision which had subsequently been declared unconstitutional. On 25 June 2009 a three‑member panel of the Supreme Administrative Court (Върховен административен съд) dismissed the application, noting that the decision of the Constitutional Court did not have retrospective effect. Therefore, at the time when it had been adopted, the disputed decision had had a sound legal basis.
44.  On appeal by MTFU, by a final judgment of 15 December 2009 a five‑member panel of the Supreme Administrative Court, with one judge dissenting, reversed and allowed the claim, declaring the Council of Ministers’ decision null and void. It noted, inter alia, that MTFU’s right of use had been extinguished by operation of law with the adoption of paragraph 6 of the transitional and concluding provisions of the State Property Act 1996. Therefore, the Council of Ministers had not been competent to decide on the matter.
45.  The Court has not been informed of the practical consequences of those developments and, in particular, whether MTFU continued to use the training centre after 2000.
46.  Further changes in MTFU’s management and board of directors were made between 2000 and 2003. In 2001 and 2003 the new management also brought about an amendment of the company’s articles of association.
47.  In October and November 2001 MTFU’s management increased the company’s share capital to BGN 195,000 (before the increase it was BGN 60,000 – see paragraph 9 above) by authorising and issuing new shares. The shares were subscribed for by shareholders who had until then held 8% of the capital (see paragraph 20 above). None of the applicants was offered or allowed to subscribe for any of the new shares. In 2006 and 2008 the share capital of MTFU was again increased through the issuance of new shares, reaching BGN 1,251,500. The applicants were unable to subscribe for any of those new shares.
48.  According to MTFU’s annual report for 2008, three companies – none of them among the applicant companies – together held 99.1% of its shares. It is unclear who held the remaining 0.9%. At the end of 2008 the company had two employees. In 2007 and 2008 it did not declare any profit to the tax authorities. It appears that by that time it no longer carried out activities in the field of professional training.